Manufacturing order books ‘well above’ long run average

Manufacturing order books and export order books remained well above their long run averages in the three months to February.

According to the latest monthly CBI Industrial Trends Survey, output grew at a healthy pace in the period. Growth was broad-based with output growing in 16 out of 17 sub-sectors with growth predominantly driven by food, drink and tobacco, and motor vehicle and transport equipment sub-sectors.

Respondents to the survey anticipate that output growth will slow a little over the next three months, broadly matching the pace seen in September and October last year.

Expectations for output price inflation weakened from last month’s 34 year high, but remain above the historical average. Meanwhile, stocks were considered to be above adequate levels, but below the long-run average.

Looking at growth in the economy more broadly, momentum was tepid for most of 2017.

Demand in the manufacturing sector should continue to be buoyed by the lower pound and buoyant global economy, the survey said but it expects consumer-facing companies and retailers to continue to struggle while consumer incomes remain under pressure from higher inflation.

Anna Leach, CBI head of economic intelligence, said: “This month saw another strong showing from UK manufacturers. Although order books weren’t quite as buoyant as they were last month, demand remains strong and output grew briskly.

“With the Brexit negotiations reaching a critical juncture, many businesses are concerned about future barriers to trade and are looking for clarity over the future relationship with the EU. Remaining in a comprehensive customs union will help alleviate some of those fears and give firms the confidence to invest and grow.”